I must admit, I was reporting increase in paper profit over a two-day period. Also, I didn’t include the paper profit made on gold in my wife’s portfolio; I increased her 401K by 20% in about ten days. She’s thrilled.
I haven’t sold and I’m still holding all my gold. I see gold was up today, charts showing NY spot price is at a 30-day high.
I don’t have the answers on when to book profits on gold, but I’ll share my GUESSES on the gold market.
I believe this week was one of the most significant inflection points for gold in many years. The collapse of the dollar will now accelerate as the world is losing confidence in America’s ability to handle a national debt apparently expanding exponentially (Wars we cannot afford, Social Security underfunded, previously existing national debt, trade deficit, bailout of Fannie/Freddie, AND AIG, AND Bear Stearns, AND now the MASSIVE sector-wide bailout of the entire banking and mortgage system, buying up all their bad debt).
As the world now starts to flee the dollar, the Million Dollar Question is WHAT will they trade their millions of dollars into? EUROS? GOLD? RMB? Swiss Francs?
The markets answered this week: at least in part, as some are clearly trading into gold.
While some of that was simply driven by fear (seeking safe haven from market chaos), the last 24 hours were very revealing.
I think you would agree that with the announcement of the new wider bailout, at least there has been an increase in the perception of increased market stability. Then as expected the stock market rallied, but we would have expected to see the gold market turn south as money moved back from gold into stocks.
That didn’t happen.
Instead, gold showed strength – because investors saw that the new bailout plan involves TRILLIONS more of debt load on the shoulders of the dollar, making it far more inevitable our government will eventually (or immediately) be forced to inflate its way out of this debt load, by devaluing the dollar.
So, I believe the dollar now renews its decline, and gold will soar through $1,000/ounce within months (or weeks) and then head towards $2,000/ounce.
